Opening a franchise, like any business venture, comes with a handful of risks—especially on the end of the franchisor. Franchisees could fail to open their unit, have too little working capital to be profitable and successful, or even become future litigants, having been subjected to the aforementioned. One way that franchisors can minimize these risks is by verifying assets, or confirming that the assets applicants report are accurate. While it may seem obvious, the practice of asset verification is not so prevalent among top franchise executives, with about 74 percent admitting to not verifying franchisees’ assets whatsoever.
“We always recommend to our franchisor clients that they need to ‘trust AND verify’ the financial position and backgrounds of their candidates,” franchise attorney Tom Spadea said. “It is an often overlooked step that creates unnecessary risk for a system in the rush of trying to do a deal. An outsourced solution is ideal, creating a solid paper trail and mitigating the risk that the wrong person will get into the system.”
Luckily, franchisors can avoid the risks associated with lack of asset verification and spur franchise growth by turning to BoeFly’s Franchise Sales and Financing System, which includes an asset verification and background check service. With this service, franchisors can have peace of mind in knowing they can move forward with prospective franchisees, and trust in their reported assets from the start.
“Establishing an asset verification procedure with BoeFly has proved to be a crucial and invaluable step in helping us not only confirm the financial viability of potential franchisees, but also gain the comfort and confidence we seen to move forward with a new partnership,” said Rick Lauro, the Vice President of Finance at Boston’s Pizza.
To read the full story in 1851 Magazine, click here.